Ele Ludemann: Council rates rises unsustainable

The previous government’s Future of Local Government Review was a very sick mongrel which Local Government Minister Simeon Brown has mercifully euthanised.

. . . The previous government initiated the review because its Three Waters and resource management reforms would have stripped local government of responsibility for water assets and planning rights.

“Our government has repealed Labour’s divisive and unpopular reforms and has restored continued local ownership and responsibilities for water services and resource management,” Mr Brown says.

While the review was initiated in response to the previous government’s reforms, the review lost its way with recommendations focussing on issues such as lowering the voting age, changing the voting system, and removing local voices from establishing Māori wards.

“These issues are a distraction from the key issues facing local government, such as the need to reform funding and financing, and planning for long-term economic growth, housing and infrastructure, which is what our Government is focused on.

“The Government is establishing a regional deals framework and unlocking new funding and financing tools to enable central and local government to work together in delivering the services and infrastructure Kiwis rely on.”

While the Review highlighted longstanding funding and financing issues in the local government sector, some of the review’s other recommendations were ideologically driven, such as mandating wellbeing goals and establishing a bureaucratic stewardship institution.

“The Coalition Government is focused on rebuilding the economy to reduce the cost of living for New Zealanders. We are setting clear expectations that councils focus on the delivery of core services and value for money.”

The Minister is right to stop wasting money on the review and to direct councils to focus on what they should be doing – delivering core services and getting value for money.

Projected local body rates increases in the teens are far too common and they are unsustainable.

They are feeding inflation and imposing costs on households and businesses already struggling with the cost of living.

Some of the blame for the increases is due to successive central governments loading more and more responsibilities and requirements on local bodies without any funding.

Some of the blame lies with successive councils which have prioritised shiny new things over their core functions.

Successive councils are also to blame for short-term policies to keep rates lower which has added to longer term costs.

Rates rises are particularly hard on people who are asset rich and cash poor, many of whom are elderly. Central Otago mayor Tim Cadogan’s suggested solution of reverse mortgages was understandably unpopular:

Retiree Stephanie Sommers, of Roxburgh, said the proposed rate increases in her area would leave some people in “dire situations”.

Rates on a Roxburgh residential property were expected to increase by about 33%.

“It’s almost like heart-attack territory,” Ms Sommers said. . .

It was insulting and “callous” for the mayor to suggest ratepayers put their houses on the line, she said.

“[People] save for years to buy their own home and have their little piece of their dream and then to have to put it into a reverse mortgage situation to help the council get out of their nightmare.

“[It is] helping them get out of their debt situation by encouraging us to get in it.”

Trevor Gouldie, of Alexandra, formerly a long-term council accountant, submitted at annual plan deliberations last week, where he said elected officials had “lost touch with reality”.

Suggesting ratepayers to take reverse mortgages to pay rates was “like using a bulldozer to open a walnut”. . .

“Tim [Cadogan]’s proposing we should do that for short-term benefit … it’s not good personal management to do that kind of thing.

It’s not good public management to do the kind of thing councils keep doing -imposing unsustainable rate rises on households and businesses – either.

High costs for development levies and council services such as building consents are one way councils have tried to increase income without increasing rates but that’s not sustainable either.

Smaller councils have fewer ratepayers but Auckland shows that a super city isn’t necessarily super and bigger isn’t always better. However, there could be benefits in neighbouring councils working together more and sharing some staff.

The coalition government’s review of regulations and health and safety legislation could help reduce costs too.

Giving councils at least a part share of the GST paid in their areas is another suggestion that could lower the burden on ratepayers. But when central government is facing so many years of deficits it is unlikely to be keen on giving some of its income to local governments.

Whether any of these would be enough is debatable.

The problems with local government are easy to see, solving them is much harder.

Councils aren’t broken yet, but unless there’s an alternative to unsustainable rate rises many will be.

Ele Ludemann is a North Otago farmer and journalist, who blogs HERE - where this article was sourced.